Govt initiates FBR restructuring

Akhtar to head implementation committee, 72 hours deadline for legal package

ISLAMABAD:

With less than a week before the general elections, the interim government has notified an implementation committee to execute the restructuring of the Federal Board of Revenue (FBR) and has set a tight deadline of 72 hours to finalise a legal package.

Chairperson of the Pakistan Stock Exchange and Sui Southern Gas Company Limited, Dr Shamshad Akhtar will head the implementation committee in her capacity as the finance minister. The first meeting of the committee was held on Saturday, immediately after the notification, during which the chairperson of the committee presented her plan for overhauling the tax machinery.

The Revenue Division has notified the eight-member Implementation and Asset Distribution Committee to give effect to the FBR’s restructuring. Two sub-committees have also been notified to prepare a slew of legal amendments in laws, finalise new statutes, and distribute the assets between the two new organisations. The sub-committee on the distribution of assets also met on Saturday.

Other members of the implementation committee include the Secretary of Law, private consulate Dr Musharraf Rasool Cyan, Dr Manzoor Ahmad, Member Administration FBR Nadeem Rizvi, Member Legal Customs Mukarram Jah Ansari, and Member Inland Revenue Policy Afaq Qureshi. Additional Secretary Revenue Division, Sajid Qazi, will act as the secretary to the implementation committee.

Three days ago, the federal cabinet approved the FBR’s restructuring. After the cabinet meeting, Prime Minister Anwaarul Haq Kakar told The Express Tribune that the restructuring of FBR would be implemented by the next elected government, and the next Parliament would make requisite changes. However, immediately after approval, the Election Commission of Pakistan barred the prime minister from taking any action, terming it beyond his constitutional and legal mandate. According to the ECP, the caretaker Prime Minister should avoid major reforms in the FBR and keep it pending for consideration by the new government after the General Elections-2024. The committee notification indicates that the interim government will prepare plans within four to seven days, but no timeframe for submitting this plan to the federal cabinet has been given.

The approved restructuring involves the cessation of the FBR, leading to the creation of two new organisations and three new boards. Legislative changes, including enactments for Customs and Inland Revenue establishments, and alterations in respective rules and Rules of Business 1973, will be required for the restructuring’s implementation.

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On the administration side, changes will be necessary regarding budget and expenditure allocations, establishment of new administrations, and division of existing assets between the two administrations. In place of the FBR, the Federal Custom Board and Federal Inland Revenue Board will be created and placed under the Revenue Division.

A government official stated that the Special Investment Facilitation Council supports the cabinet’s decision, but said legislative changes should be left to the new government. The implementation committee will only prepare drafts of amendments, shared with the next elected government.

The notification mentions that the finance minister will engage with the economic teams of all major political parties to create understanding and buy-in for the approved restructuring. According to the notification, the legal sub-committee will prepare a legal package for the restructuring’s implementation within four days. The package will include a statutory draft of new legislation, amendments in respective statutes, changes in rules of business of 1973, and other related rules and regulations.

The legal committee will also finalise the revised mandate of the Revenue Division, including the creation of a tax policy unit and the constitution of the tax policy board. The legal committee will conclude the establishment of the Federal Board of Customs and Federal Board of Inland Revenue within four days. Its mandate also includes proposals for the operationalisation of Customs Administration and Inland Revenue Administration within four days.

Once the legal plan is ready, it will be placed before the main implementation committee, which will have two days to give its approval. After approval, a one-day deadline is set for the Law Division to approve the legal package and prepare it for submission before the federal cabinet.

Published in The Express Tribune, February 4^th, 2024.

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